Hidden costs exist all around us. From airline tickets to credit cards to cars, many everyday purchases come with unforeseen expenses that go beyond the sticker price. They are so common that you’ve probably paid some hidden costs in the last month without even realizing it. Just pull out your most recent cell phone bill for a refresher.
Phone bills always have fees, taxes, and service charges at the bottom that go beyond the list price of your monthly phone plan. While these additions seem small, they can slowly take a bite out of your wallet and make a dent over time. Hidden costs may be slow and silent, but that doesn’t stop them from wrecking your budget and ROI in the long term.
Like cell phone plans, BI software can also have hidden costs. Too often, software buyers focus on the license costs without factoring in the additional resources required to implement and maintain a business intelligence initiative. These extra costs are overlooked during the buying process only to rear their heads down the line when you least expect it.
Too often, software buyers focus on the license costs without factoring in the additional resources required to implement and maintain a business intelligence initiative.
Lurking expenses make it a challenge to size up different software vendors, create IT budgets, and plan accordingly for the future. You can’t avoid certain costs. But a clear understanding of what to expect can help you determine the best BI solution for your organization’s requirements and budget – all while keeping any future surprises (and headaches) to a minimum.
In this eBook, we’ll explore how to develop a framework for calculating the total cost of ownership (TCO) of your data investment, highlight some of the most common hidden costs of business intelligence software, and share top tips to uncover costs lurking just below the surface.
Does Business Intelligence Really Cost?
It’s essential to remember that price isn’t the most critical factor to consider when choosing a BI solution, but it’s vital to the evaluation process. As you explore potential BI solutions, make sure you’re putting due weight on functions and capabilities that will help your organization achieve your business goals first.
According to a recent study from New Vantage Partners, 55% of companies have invested over $50M in business intelligence, while others have spent as much as $500M. Sadly, such a broad spectrum isn’t conducive to planning your IT budget.
Getting a grasp on what it will cost to implement new BI software can be tricky — especially when you’re evaluating a solution for an entire team or organization. Forecasting can quickly get complicated and the last thing you want to do is underestimate your costs down the road.
Each BI software vendor prices its services a little bit differently, meaning an apple-to-apple comparison is hard to come by without doing your homework first. This is where Total Cost of Ownership (TCO) calculations come into play.
Total Cost of Ownership: A framework for assessing the costs of business intelligence
BI software costs start — not end — with a subscription. It’s everything that comes after that brings you to the total cost.
Gartner defines TCO as a comprehensive assessment of information technology (IT) or other costs across enterprise boundaries over time. For IT, TCO includes hardware and software acquisition, management and support, communications, end-user expenses, and the opportunity costs of downtime, training, and other productivity losses.
To kick things off, you need to start thinking about the two main types of costs and how they are measured: hard costs and soft costs.
Assessing hard vs. soft costs
Together, hard and soft costs include both upfront and implementation dollars (hard costs) and ongoing expenditures to maintain and support the initiative (soft costs).
Hard costs are easier to come by because they are usually clearly priced by vendors. It’s the soft costs that tend to be overlooked or underestimated because they aren’t readily available. These are often unique to each company, which means you’ll need to put in the work to get an estimated TCO.
To avoid underestimating costs and get a better understanding of what a solution entails, here’s a more comprehensive breakdown of potential hard and soft costs to consider:
TCO can help you organize the entire costs of buying, deploying, and managing BI over time. This framework makes evaluations more effective because you can uncover the total return on your BI investment. Here’s a helpful formula to consider when evaluating the total costs:
Upfront & Implementation Costs
Ongoing Maintenance & Support Costs
BI technology costs
Data infrastructure costs include all expenses associated with your data infrastructure over the course of deployment. These typically include:
Cloud Infrastructure or platform (database, data warehouse, data lake, etc.)
- Infrastructure as a Service (IaaS)
- Platform as a Service (PaaS)
- Compute and storage costs
- Source APIs + Integrations
- Data Connectors (ETL/ELT)
BI software costs are the costs associated with licensing and platform subscriptions for your software solution(s). These typically include:
Software licenses and subscription costs
- On-prem software
- Desktop software
- Software as a Service (SaaS)
Installation, setup, and maintenance costs are spent throughout the solution lifecycle to initially set up, roll out, and support your BI software and data infrastructure:
- Procurement (multiple teams)
- IT team
- Data/BI team
Data preparation, analysis, and exploration costs are incurred throughout the entirety of the solution lifecycle and will vary depending on who is doing the work:
- Data analysts
- Data scientists
- Line of business users
Keep in mind that this list is a sample of the most common costs incurred from a “typical” BI solution. Each company is unique and your costs may be different depending on the type of solution you choose.
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